Recent Blog Posts

  • 6 Ways to Protect Your Home From a Lawsuit
    For most of us, our home is one of our most valuable assets. It truly is our “castle,” but can also be one of our most vulnerable assets. Although we need to protect it at all costs, we face several dilemmas that create significant hurdles to protecting the complete value of our home. Is an LLC a solution for primary residence? First, I’m concerned about the LLC being a simple ‘silver bullet’ solution to protecting a home.  An LLC wasn’t designed or built for this purpose. The LLC is obviously perfect for income producing assets, or even a cabin, beach house, farm or 2nd home in a VRBO or Airbnb strategy. But how is a personal residence a business asset, it’s not. If I was a litigation attorney going after a debtor’s home in an LLC I would immediately attack the corporate veil and claim a co-mingling of personal and ... Read more
  • Solo(k) and 401(k) Rules When You Have Employees and Multiple Businesses
    A 401(k) is a great benefit normally associated with large companies where the employee makes contributions and the employer offers a match. The contribution limits are high (and total max contribution of 56k for 2019) and can allow for significant tax deferral on the income you earn each year. What a lot of people may not know is that you don’t have to be a large company to have a 401(k) plan. In fact, you can be the only employee in your own business and have a retirement plan. If it is just you in your business, your company can start a retirement plan known as a solo 401(k). The solo 401(k) allows you to adopt a retirement plan and make personal as well as company contributions to the plan for yourself and any of the owners of the company. You must have a business generating ordinary income to make ... Read more
  • Choice of Entity – Is an S Corporation is right for you?
    I get asked almost daily if an S Corporation is a good fit for their business and I can tell you that there is a lot at stake. So much so, that it is well worth your time to know the basic differences between an S Corp and LLC before you ask a licensed professional for a recommendation. You are the captain of your own ship! You need to be able to determine if your professionals are advising you under standard and well recognized basic concepts. Surprisingly there are advisors across the country that miss the mark and give truly damaging advice that costs small business owners thousands of dollars. Here are five of the major factors that the lawyers at our office considers when making a recommendation of an S Corp to clients. Before proceeding further, I would like to clarify that when you have an LLC ‘taxed as ... Read more
  • Roth IRA Distributions Before Age 59 ½
    Every Roth IRA account owner knows that the main benefit of the Roth IRA is that there are no taxes due on withdrawals taken after the account owner is 59 ½. However, what taxes or penalties apply to distributions taken before the Roth IRA owner reaches 59 ½? Roth IRA distributions before age 59 ½ are broken into two categories, contributions and earnings.  Contributions Can Be Withdrawn Before 59 ½ Without Tax or Penalty The first first category is Roth IRA contributions. This category is distinct because these amounts have been subject to tax before the funds were included in the Roth IRA. The amounts withdrawn from a Roth IRA that do not exceed the amounts of Roth IRA contributions are not subject to taxes or penalties upon early distribution from the Roth IRA. However, any amounts distributed in excess of the Roth IRA contributions, which would typically be ... Read more
  • Roth IRA Distributions Before Age 59 1/2
    Do Taxes or Penalties Apply to My Early Roth IRA Distributions? Every Roth IRA account owner knows that the main benefit of the Roth IRA is that there are no taxes due on withdrawals taken after the account owner is 59 ½. However, what taxes or penalties apply to distributions taken before the Roth IRA owner reaches 59 ½? Roth IRA distributions before age 59 1/2 are broken into two categories, contributions and earnings.  Contributions Can Be Withdrawn Before 59 1/2 Without Tax or Penalty The first first category is Roth IRA contributions. This categories is distinct from the rest of the account because these amounts have been subject to tax before the funds were included in the Roth IRA. The amounts withdrawn from a Roth IRA that do not exceed the amounts of Roth IRA contributions are not subject to taxes or penalties upon early distribution from the Roth ... Read more
  • Why Starting a Small Business is the First Step in Building Wealth
    I realize this may sound cliché or even crazy, but the FIRST Step I have learned over my 18 years as an Attorney and CPA, is that if someone REALLY wants to build wealth and save taxes, they need to Start a Small Home Based Business. Please hear me out for those of you that work a ‘regular job’ and DON’T want a small business. Now, I’m not asking you to quit your ‘day job’, I’m just asking you to at least have a small business ‘on the side’. Read this article on ‘Why Quitting Your Day Job May Not Be a Good Idea”. HOWEVER, there are so many good reasons to have a small project brewing on the back burner, and very few reasons not to.  Some say it is too ‘risky’ in today’s economy to start a business.  I say it is too risky NOT to start a ... Read more
  • The Auto, SUV & Truck Deduction: Mileage or Actual?
    First and foremost, remember the auto deduction isn’t travel, but expenses for your car, truck or SUV. Also, remember this includes ALL your vehicles as long as they have some sort of business use, i.e. an RV, van, delivery truck or motorcycle used in your business (more articles to come)! Next, the law changed Big Time with the Tax Cuts and Jobs Act (TCJA) and from 2018 through 2023 the auto/truck/suv deduction is Amazing!! Things got a lot better for business owners with cars/autos…if not AT LEAST you have a lot more options. You can actually write-off a vehicle at lot faster and with bigger deductions! However, the big question that is always in my conversation with clients, which strategy is best: Mileage or Actual expenses. It’s not an easy question and lots of variables. Below I list 7 general rules that will help guide you through the decision process. But ... Read more
  • Self-Directed IRA Fair Market Valuations Explained
    An IRA must report its fair market value to the IRS annually. Fair market value is reported to the IRS by your IRA custodian via IRS Form 5498. For standard IRAs holding stocks or mutual funds, those account values are automatically determined as they simply take the stock or fund price as of the close of the market on December 31st each year. They then use these amounts to set the year-end account fair market value. For self-directed accounts, such fair market values are not readily available, and it becomes the IRA account owner’s responsibility to obtain their self-directed investment values so that their custodian can properly report the account’s fair market value. The value of an account is important for a few reasons. First, the IRS requires it to be updated annually. Second, it is used to set required minimum distributions (RMDs) for those account holders over the age ... Read more
  • Utilizing a Strategic Plan in Your Business is Critical for Success
    Even experienced business owners can benefit from using a Strategic Plan as an integral part of their business. It is so difficult to manage all of the loose ends and chaos that can occur when running a small business. A “Plan” of any sort can help tremendously in creating success and reducing stress. A Strategic Plan is very different from a Business Plan. A Strategic Plan sets forth a timeline of specific tasks that need to be completed in order to make your Business Plan a reality. It’s a specific list of objectives to reach specific goals. Now once your business is up and going, we all know your Business Plan goes in the drawer and your Strategic Plan helps you implement what you conceived in the beginning. Essentially, I consider it in many ways a checklist of things that need to be completed in the next month, 3 months, ... Read more
  • How to Hire a Sub-Contractor or Freelancer
    Hiring a sub-contractor or freelancer can be the perfect strategy for many small business owners to save money and build their business. However, going through the process can be a mine field of significant problems. In fact, there is a procedure for properly hiring a sub-contractor and doing it right. If done wrong there can be serious liability exposure and IRS and State regulatory problems. Employee versus Sub-contractor First, make sure your “contractor” isn’t really a glorified employee. If they act like an employee, serve like an employee and are paid like an employee…THEN they are an employee! IF you treat a ‘worker’ as a sub-contractor, when really they are an employee, your business and even you personally could or would be liable for any accidents or damages created by the worker. This could be the worker themselves getting hurt, OR even property damage or personal injuries caused ‘by’ the ... Read more
  • Dial in Your S-Corp Strategy BEFORE Year-End
    When it comes to tax strategies for entrepreneurs, I am convinced that the S-Corporation (S-Corp) is one of the most powerful long-term strategies to build upon. The tax benefits, audit protection and foundation for other tax deductions are absolutely amazing in an S-Corp. Frankly, it’s because the S-Corp is so financially efficient for the small-business owner. So for those of you that are already S-Corps, this is the time of year to dial in your salary level. See my Payroll Matrix and suggestions on how to peg the perfect salary amount for your situation below. For those who haven’t quite caught the vision or potential of the S-Corp, let me make a few important points and explain some of the benefits you are missing out on. S-Corps: The Reason Why The problem we’re trying to solve is that if you sell products or services, receive a commission, flip properties or ... Read more
  • Why an HSA May Be Your Best Tax AND Healthcare Strategy
    One of the most underutilized tax strategies by small business owners is the use of a Health Savings Account (“HSA”).  It’s a fantastic tax savings strategy as well as a powerful tool to help pay for current and future health care costs. In my opinion, everyone should at least consider the HSA as an option when purchasing insurance. This year in 2018, then ‘Open Enrollment’ for a 2019 health insurance plan runs from November 1, 2018 to December 15, 2018. Outside the Open Enrollment Period, you generally can enroll in a health insurance plan only if you qualify for a Special Enrollment Period. The reason why it’s so important to think about an HSA plan during Enrollment Period is that IF YOU DON’T choose the right plan NOW, you can’t take a deduction and contribute to an HSA in 2019. I don’t sell health insurance, but as a tax advisor I strongly encourage my clients to understand the power of ... Read more
  • Deduct Your Holiday Business Travel and Dining
    From my perspective, travel is one of the most underutilized tax deductions by small-business owners today. I try to make all of my travel a business write-off by following a few simple rules. Moreover, meals and travel can be a powerful write-off during the holidays and meetings with your Board of Directors/Advisors are not only a good tax deduction, but a powerful way to boost the success of your business. See this article here for more information on building your “Board”: https://markjkohler.com/setting-up-your-board-of-directors-or-advisors/. Remember a few key facts. Valid travel expenses are 100% deductible, meals discussing business are 50% deductible and if you are ‘traveling for business’, meals even by yourself are deductible. In 2018, entertainment expenses, whether or not you are traveling, were completely eliminated, but travel expenses are STILL 100%  deductible!! As for ‘travel’, the following are wonderful expenses, with a legitimate business purpose, are 100% deductible: ... Read more
  • What types of Donations are a tax write-off?
    This is certainly the season for giving and surprisingly there are a lot of options and rules to keep in mind. Now, first and foremost I don’t think there is anything wrong with seeking out a tax deduction when you give.  I hope that doesn’t offend any of you generous folks out there, but let’s face it…we all pay our fair share of taxes. Why can’t we get a little boost on our tax return for helping others in need during the year or even during the holidays? First, some basic rules when giving: Make sure you itemize- Now with the changes under the Tax Cuts and Jobs Act (“TCJA”) and the increase of the standard deduction, your itemize deductions need to exceed $12,000 if your single and $24,000 if your married, in order to get any tax benefit for a donation. Meaning,This deduction is not available to individuals who choose ... Read more
  • Year-End Health Care Strategies for Small Business Owners
    Many entrepreneurs don’t realize it but as small-business owners we have more options to save on healthcare costs than any other group of Americans. The tax-planning and cost-saving strategies can be phenomenal. It simply takes a little bit of research and consulting with professionals to create the perfect plan for you. Here are important year-end healthcare savings and tax strategies to implement for every small business owner to consider. Keep in mind some of these deadlines relate to the December 15, Insurance Enrollment deadline, and other relate to the tax strategies that need to be in place before December 31st.  Review these carefully as they could help you save thousands of dollars when you build your plan of attack. Claim the health insurance deduction properly This is a huge benefit for small-business owners that cannot be taken advantage of by average Americans. Health insurance is 100% deductible for a small-business owner, whether you cover your other employees or ... Read more